Coca Cola 2004 Annual Report Download - page 72

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
a loss for the cumulative effect of accounting change for SFAS No. 142, net of income taxes, of $367 million for
Company operations and $559 million for the Company’s proportionate share of impairment losses from its
equity method investees. We did not restate prior periods for the adoption of SFAS No. 142.
Trademarks and other intangible assets determined to have indefinite useful lives are not amortized. We
test such trademarks and other intangible assets with indefinite useful lives for impairment annually, or more
frequently if events or circumstances indicate that an asset might be impaired. Trademarks and other intangible
assets determined to have definite lives are amortized over their useful lives. We review such trademarks and
other intangible assets with definite lives for impairment to ensure they are appropriately valued if conditions
exist that may indicate the carrying value may not be recoverable. Such conditions may include an economic
downturn in a geographic market or a change in the assessment of future operations.
All goodwill is assigned to reporting units, which are one level below our operating segments. Goodwill is
assigned to the reporting unit that benefits from the synergies arising from each business combination. Goodwill
is not amortized. We perform tests for impairment of goodwill annually, or more frequently if events or
circumstances indicate it might be impaired. Such tests include comparing the fair value of a reporting unit with
its carrying value, including goodwill. Impairment assessments are performed using a variety of methodologies,
including cash flow analyses, estimates of sales proceeds and independent appraisals. Where applicable, an
appropriate discount rate is used, based on the Company’s cost of capital rate or location-specific economic
factors. Refer to Note 4.
Derivative Financial Instruments
Our Company accounts for derivative financial instruments in accordance with SFAS No. 133, ‘‘Accounting
for Derivative Instruments and Hedging Activities,’’ as amended by SFAS No. 137, SFAS No. 138, and SFAS No.
149. Our Company recognizes all derivative instruments as either assets or liabilities at fair value in our
consolidated balance sheets. Refer to Note 10.
Retirement Related Benefits
Using appropriate actuarial methods and assumptions, our Company accounts for defined benefit pension
plans in accordance with SFAS No. 87, ‘‘Employers’ Accounting for Pensions.’’ We account for our nonpension
postretirement benefits in accordance with SFAS No. 106, ‘‘Employers’ Accounting for Postretirement Benefits
Other Than Pensions.’’ In 2003, we adopted SFAS No. 132 (revised 2003), ‘‘Employers’ Disclosures about
Pensions and Other Postretirement Benefits,’’ (‘‘SFAS 132(R)’’) for all U.S. plans. As permitted by this standard,
in 2004 we adopted the disclosure provisions for all foreign plans for the year ended December 31, 2004. SFAS
No. 132(R) requires additional disclosures about the assets, obligations, cash flows and net periodic benefit cost
of defined benefit pension plans and other defined benefit postretirement plans. This statement did not change
the measurement or recognition of those plans required by SFAS No. 87, SFAS No. 88, ‘‘Employers’ Accounting
for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits,’’ or SFAS
No. 106. Refer to Note 14 for a description of how we determine our principal assumptions for pension and
postretirement benefit accounting.
Contingencies
Our Company is involved in various legal proceedings and tax matters. Due to their nature, such legal
proceedings and tax matters involve inherent uncertainties including, but not limited to, court rulings,
70